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proves right that China will allow its currency to
depreciate more significantly in the first quarter of
2016.
THE COMMODITY MARKET
In the commodity market, the “supply door” is
narrowing as the mining sector has seen a steep decline
in capital expenditure in the last few years. At least, this
is the case in the non-energy sector and may soon be
the case in the oil market, although here
international politics play a far bigger role .Further down the road, this could create the right
conditions for a sharp rebound in commodity prices,
when demand regains momentum. The latter,
however, requires that China launches more aggressive
stimulus measures, which is also part of
Insightperspectives’ storyboard for 2016. The situation
in the oil sector, however, is far more complicated as
Saudi Arabia still shows no signs of intending to end the ongoing price war- read also the article,
The game plan of president Putin matters to the global financial market - not least when it comes to the oil price .THE STOCK MARKET
In the 2016 Outlook, the US economy is perceived to be
late-cycle although this is based on the forecast that
the US Federal Reserve will continue to raise policy
rates and the dollar stays strong. Such an outcome will
be a drag on the US stock market.
The perception that the European economy is seen to
be mid-cycle is not expected to benefit the European
stock market that much due to rising political tension
caused by the refugee crisis. This risks turning the
European stock market into a “value trap”. Granted,
this is a call not without risk, as the European economy